INDUSTRY Angel Investing
John P. Dilts
Founder & President
Maverick Angels, LLC
Since the ‘90s, venture capitalists (VCs) have largely moved upstream to manage bigger funds, and a distinct funding gap emerged between VCs and the seed stage, friends, and family round of financing. Especially since the economic recession hit and many VC funds stopped in their tracks, angel investors have filled that funding void and have surpassed the volume of VC investing in emerging-growth companies.
Angels are high net-worth individuals who invest a minimum of $25,000 to $50,000 directly into a start-up company that is typically raising from $250,000 up to $2M in an early-stage financing round. As a result, the angel’s participation can provide crucial support to an emerging-growth company otherwise marooned in this funding gap, or “Valley of Death,” as it is often called.
However, the challenge is that angels are very fragmented and often invest on their own without the support of others looking at the same deal. This has created the need for professionally managed angel investment clubs like Maverick Angels to become popular among start-up investors.
Incubators, venture accelerators, and numerous other early-stage focused models have come and gone, but the angel network model is now consistently growing in popularity and interest. There are specific drivers behind that trend:
1) Interest by angels in sharing risk and due diligence
2) Managing an increasing volume and variety of opportunities efficiently
3) Leveraging the collaborative strengths of the membership
4) Giving individual members the power to make their own investment decisions via a hands-on approach (especially important when managed stock portfolios take a nose dive)
5) The need to socialize and interact with like-minded, like-spirited investors with a passion for supporting entrepreneurial ventures (many are successful serial entrepreneurs themselves)
Given these drivers, there is an enormous opportunity to organize the way angels and entrepreneurs interact in the early stage in a win-win manner. We have an unprecedented ability to provide entrepreneurs with resources, guidance, and support more easily, especially since the explosion of shared information and access now available to entrepreneurs globally because of the IT and Internet boom.
Likewise, large companies are beginning to come downstream to source innovation from start-ups in the open market and to acquire companies when their sale prices are more reasonable. This provides a new, more streamlined path for angel investors to recover their investment profits sooner.
There is a need to create a fresh, new, and highly-structured approach for how innovation and opportunity meet with financial and strategic resources according to new parameters for engagement of the various players in a more systemic way. We need to work to fast-track new ventures toward scalable growth and ultimately liquidity in ways never before possible. This requires that all the participants in the entrepreneurial ecosystem share a common language and understanding about the entrepreneurial path and participate in a shared process to reduce risk and optimize upside in an effort to create a positive result for all involved.
For more information about Maverick Angels and its events in Westlake Village, the South Bay, or Santa Barbara, go to www.maverickangels.com or e-mail info@maverickangels.com to inquire about attending an upcoming meeting as a guest to observe.
John Dilts is the Founder and President of Maverick Angels, LLC, a highly innovative angel investor network based in Southern California which focuses on funding and mentoring early-stage companies. Since founding the company in 2006, John has established Maverick Angels chapters in Southern California and Europe. John is an expert in the areas of innovation, leadership, and entrepreneurship and often serves as a featured speaker at innovation conferences and angel investor forums.
